Mortgage rates were fairly stagnant during the week ended December 14 according to the Primary Mortgage Market Survey released by Freddie Mac.

Frank Nothaft, Freddie Mac vice president and chief economist said that "Mixed economic reports have kept mortgage rates from making any drastic changes. On the upside, there was stronger job growth and greater than expected retail sales in November. Offsetting that news was weaker wage growth in that same time frame and lower indications of consumer sentiment in December."



"Long-term mortgage rates, while expected to rise over the new year, will very likely not get up to even 7 percent, which will help to moderate the current weakness in the housing market."

The 30-year fixed-rate mortgage (FRM) averaged 6.12 percent with an average 0.4 point for the December 14 week compared to 6.11 with 0.5 point for the week ended December 7. One year ago the 30-year was 29 basis points above this mark.

The 15-year FRM was up 2 basis points to 5.86 percent with points unchanged at 0.5 and was one basis point lower than the same week in 2005. The hybrid five-year Treasury-indexed adjustable rate mortgage (ARM) was unchanged at 5.92 percent although fees and points increased from 0.5 to 0.6. One year ago the 5/1 product averaged 5.77 percent.

The one-year Treasury-indexed ARM had a mean of 5.45 percent with 0.8 point compared to 5.43 percent with 0.7 point the previous week. This is 30 basis points higher than the average one year ago.

The Mortgage Bankers Association's Weekly Mortgage Applications Survey for the week ended December 15 portrayed more rate volatility.

The average contract interest rate for 30-year fixed-rate mortgages increased to 6.10 from 6.02 percent, with points, including the origination fee, decreasing to 0.93 from 1.

Interest rates for 15-year fixed-rate mortgages averaged 5.82 percent, an increase from 5.75 percent a week earlier with points decreasing to 0.99 from 1. The average rate for one-year ARMs increased to 5.82 percent from 5.76 with points increasing to 0.83 from 0.81

All rates are quoted for 80 percent loan to value conforming products.

After several weeks of impressive gains, application volume was down. The Market Composite Index which measures loan application activity dropped 10.2 percent on a seasonally adjusted basis and 11.6 percent on an unadjusted basis from one week earlier but continued to top the volume one year ago; this week it was up 13.9 percent from 2005 figures.

Refinancing as a share of all mortgage activity decreased to 50.8 percent from 52.6 percent the previous week but was still well above recent levels. Adjustable rate mortgages declined to 23.6 from 24.9 percent of applications. This is the lowest share ARM has claimed since October 2003.